Moving away from the big banks

Sunday

Oct 27, 2013 at 6:00 AM

Remember Bank Transfer Day two years ago? That's when mad-as-hell consumers were supposed to bring giant banks such as Bank of America, Chase and Citibank to their knees by moving their money to nonprofit credit unions.

It was a bust, says Consumer Reports. Few people switched, in part because of the grip big banks had on them with their alluring online and mobile banking services.

Now the top 10 credit unions have caught up, and new competitors have entered the fight for your dollars. Here's the lowdown on four alternatives worth considering.

Credit unions

Why? They offer all of the services of a bank (and federal deposit insurance) but tend to charge considerably less for checking accounts and loans. And they generally pay higher interest rates on savings.

Why not? The customer-satisfaction rating for credit unions dropped 5 points last year, to 82, according to the American Customer Satisfaction Index, which tracks 48 industries. Nevertheless, they still outscored Chase (74), Citibank (70) and Bank of America (66).

Where to find them. Membership is open only to people in a specific group, such as employees of a company, members of an association or residents of certain communities. Go to mycreditunion.gov to find prospects near you.

Regional banks

Why? If you're uncomfortable cutting the cord to a traditional bank, check out a regional or midsized bank. They now offer the same technological bells and whistles but also provide significantly higher satisfaction than the four biggest national banks, according to the ACSI. Their satisfaction score was 79 last year, placing them below credit unions but above the big banks.

Why not? There are no physical branches, which might be unsettling unless you've embraced mobile banking and rarely need to set foot inside a branch. Plus the low- or no-fee business model might be jeopardized at some virtual banks that partly finance their operations from the fees they collect every time a customer uses a debit card to make a purchase, because in July a federal court ruling signaled that those fees might be regulated lower.

Where to find them. Search online for virtual banks including Ally, Capital One 360 Checking, GoBank and Simple.

Prepaid cards

Why? Once a high-priced option for low-income consumers who couldn't qualify for a checking account or credit card, prepaid cards have moved into the mainstream and offer many of the features of a checking account. Almost all of them come with FDIC insurance. And when Consumer Reports rated 26 cards in July on value, convenience, safety and other measures, it found that consumers could avoid the few fees that the best ones had.